One is the most profitable, successful bank on Wall Street, the other came within a hairsbreadth of nationalization. Who would you rather lend money to? Apparently, right now investors are going with the latter. As of Monday, Goldman Sachs' debt was yielding 2.73%, to just 2.29% for Citigroup, according to Bloomberg, meaning that the storm of negative publicity around Goldman has convinced banks that it's the riskier bet.
Citigroup has gotten three bailouts, leaving it 36% government-owned, but fraud charges have savaged Goldman's brand. “No one’s attacking Citigroup over anything anymore, and everyone’s attacking Goldman Sachs over everything,” said one banking analyst. “ It logically tells you that Citigroup should have a lower spread.” Yesterday, Fitch Ratings downgraded Goldman's A+ credit outlook from “stable” to “negative.” (Read more Goldman Sachs stories.)